The Central Bank of Uganda announced on Thursday that it will raise the Central Bank Policy Rate (CBR) to 7.5% from 6.5%, to control rising inflation.
In a statement, the Bank of Uganda said it will continue to raise the CBR until inflation is firmly contained around the medium-term target of 5 percent.Uganda’s annual headline and core inflation rose to 6.3 percent and 5.1 percent in May 2022 from 2.7 and 2.3 percent in January 2022, respectively, the bank said.
The bank said inflation is rising fast and spreading broadly across the basket of goods and services. Supply and demand imbalances, caused by the Covid-19 pandemic and exacerbated by the Russia-Ukraine conflict, are the main drivers of broader price pressures, the bank said.
Annual headline inflation and core inflation are now expected to average 7 and 6.1% respectively in 2022, higher than previous forecasts.
Inflation is expected to peak in the second quarter of 2023, before gradually accelerating to around that medium-term target of 5% by mid-2024.